Trade Setup For Wednesday: Key Things To Know Before The Opening Bell; 3 Stocks To Buy In Intraday

Indian markets are likely to have a positive start on Wednesday as Gift Nifty trades higher and CPI inflation data came in better than expected. Notably, Asian shares traded mixed while awaiting US inflation data scheduled later today. In the previous session, domestic equities saw substantial profit booking as Sensex ended higher but Nifty closed flattish. Midcap and Smallcap stocks also retreated from their fresh record high levels. India's volatility index surged by 3.01%.

Gift Nifty, formerly known as SGX Nifty, traded at 20,073.5, up by 43.5 points or 0.22% at around 7.35 am, on Wednesday. The index opened at 20,030 and traded in the range of intraday high and low of 20,153.5 to 19,981.0 respectively.

Surprisingly, India's CPI inflation eased to 6.83% in August 2023, which was also lower than markets forecasts of 7%. CPI eased owing to sharp decline in food inflation to 9.94% from 11.51% which was the highest level since January 2020. In June 2023, CPI inflation accelerated to 15-month high of 7.44%.

Wednesday's Trade Guide:

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher expects the Nifty Spot Index to find support around 19,850/19,800 during the trade session of September 13, while resistance is seen at 20,150/20,200. Further, the Bank Nifty spot index is likely to find support in the range of 45,200/45,250 and resistance is seen between 45,800/45,850.

To investors, Ajit Mishra, SVP - Technical Research, Religare Broking said, "We expect consolidation in the index after the recent surge and suggest preferring index majors over the midcap and smallcap citing the possibility of further profit taking in the broader indices. Apart from the domestic factors, traders should keep a close watch on the US markets for cues."

Nifty 50 Support Level:

In his technical view for Nifty 50, Rupak De, Senior Technical analyst at LKP Securities said, Nifty witnessed a correction as sellers exerted pressure around the 20,100 level. However, the correction was contained, thanks to putting writers at 19,900 who helped shield the market from further declines. In the short term, the headline index Nifty is expected to maintain its strength as long as it stays above the critical short-term support level of 19,780. On the higher end, a decisive move above 20,100-20,150 could propel Nifty toward 20,500 in the short term.

Bank Nifty Support Level:

In the case of Bank Nifty, Kunal Shah, Senior Technical and derivative analyst at LKP Securities said, after a remarkable upward movement over the past week, the market experienced selling pressure from higher levels. Call writers have significantly increased open interest at the 46,000CE strike, which is now acting as a strong resistance level. On the downside, key support is seen at 45,200, and if it manages to hold this support, we could witness some recovery towards 45,600 or 45,800 levels."

Intraday Stock Picks Today:

Parekh has recommended 3 stocks to buy on Wednesday:

- Buy ITC Ltd at Rs 451 with a stop loss of Rs 443 for a target of Rs 474.

- Buy Blue Dart at Rs 6628 with a stop loss of Rs 6520 for a target of Rs 6860.

- Buy Indoco Remedies at Rs 340.50 with a stop loss of Rs 335 for a target of Rs 355.

Stock News Today:

Stocks in the news are -- Wipro, Vakrangee, NTPC, Waaree Renewable Technologies, RITES and KEC International.

FII And DII Data:

FIIs and DIIs have shown mixed sentiment for Indian stocks on Tuesday.

The foreign institutional investors (FIIs) turned net sellers by selling Rs 1,047.19 crore in Indian stocks on September 12. However, the domestic institutional investors (DIIs) made a buying of Rs 259.48 crore worth of equity shares.

F&O Ban List:

Under the F&O ban, the exchange added two more stocks namely Indian Energy Exchange and National Aluminium Company for the September 13 list, while stocks like BHEL, Chambal Fertilisers and Chemicals, Delta Corp, Hindustan Copper, Indiabulls Housing Finance, India Cements, Manappuram Finance and SAIL were retained on the list. However, Punjab National Bank has exited the list after meeting the criteria.

Securities that have crossed 95% of the market-wide position limit are added to the F&O ban list.

Market Performance for September 12:

On September 12th, traders showed a precautionary tone after Nifty 50 extended to touch a new all-time high of 20,110.35. However, Nifty closed at 19,993.20, down by 3.15 points or 0.02%, on the other hand, Sensex advanced by 94.05 points or 0.14% to settle at 67,221.13. Meanwhile, Bank Nifty fell by 59.35 points or 0.13% to end at 45,511.35.

Stocks like TCS, L&T, Infosys, Ultratech Cements and Dr. Reddy's Lab were top gainers. Among the top bears were stocks like BPCL, NTPC, Power Grid, Adani Enterprises and Coal India.

Further, the Nifty Midcap 100 and Smallcap 100 index nosedived by 3.07% and 4.10% to end at 40,170.30 and 12,450.20 respectively. During the trading hours of Tuesday, both midcap and smallcap indexes touched yet another lifetime high of 41,686.75 and 13,079.20 before correcting drastically.

Of the total 3,805 stocks that traded on BSE, 692 stocks advanced, 2,995 stocks declined and 118 stocks were muted. A total of 263 stocks touched new 52-week highs and 20 stocks struck their 52-week lows.

On Tuesday's performance, Vinod Nair, Head of Research at Geojit Financial Services said, "The level of pessimism has risen in the stock market leading to a precautionary approach to book profits on a notion that the valuation has extended beyond the rationale. The correction is happening on midcaps while large caps are maintaining their strength. This cautious trend can prevail in the short-term, but the end-game is on the rise of the domestic economy, surprising upside in corporate earnings, and change in domestic investment patterns, which is expected to continue on a long-term basis."

Global Trends:

Asian shares witnessed a mixed trend ahead of US inflation data due on Wednesday. Japan's Nikkei 225 rallied by 308.61 points, on the contrary, South Korea's KOSPI and Australia's ASX 200 dipped by nearly a per cent each. Notably, the Hang Seng index was also down by 0.3%, followed by China's mainboard Shanghai Composite Index which slipped lower as well.

The performance also comes amid a sharp rise in crude oil prices in early Asian trade as output cuts from the leaders of the OPEC+ heightened anticipations of tightest supply in a decade. Brent crude futures jumped 0.2% to 92.17 per barrel, while US West Texas Intermediate crude futures inched up by 0.1% to $89.02 per barrel. Both crude benchmarks are trading at their highest level since November last year.

Also, as per the Bloomberg report, treasury two-year yields, which are more sensitive to imminent Fed moves, stayed above 5 per cent, while their 10-year peers held at 4.28 per cent. An auction of the US 10-year notes on Tuesday drew the highest yield since 2007 as investors demand increased compensation for elevated inflation and rising US debt issuance.

Coming to the currencies, the dollar slipped slightly, while other currencies like the yen were in narrow ranges.

Ahead of inflation data coupled with a spike in crude prices and a huge rout in technology firms dragged Wall Street overnight. The Dow Jones Industrial Average dropped by 17.73 points, the S&P 500 index plunged by 0.6%, and the tech-heavy Nasdaq Composite index dived by 1.04%.

Disclaimer:
The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.